State aid: Commission clears France's Carte musique to encourage legal downloads of music

The European Commission has approved, under EU state aid rules, a French scheme that subsidises legal downloads of music by French residents aged 12 to 25 years. The measure is aimed at combating illegal downloads and, thus, at creating the condition for an increased offer of music and lower prices for consumers. The Commission found the measure to be in line with EU rules allowing the fostering of general interest goals. In particular, the measure is well designed to achieve its objective, is limited in time and scope and contains safeguards to limit potential distortions of competition.

Joaquin Almunia, Commission vice-president in charge of competition policy declared: "We welcome initiatives from Member States to increase the availability of music online at a lower price for consumers and through legal distribution channels. Music online is certainly a driver for the success of the Internet and for economic development. However, we shall ensure that such initiatives are implemented in compliance with the EU state aid rules."

In March 2010, France notified the proposed creation of a Carte musique for young Internet users (between 12 and 25 years old) to download music from subscription-based website platforms. The card would include a €50 credit for the purchase of music online but would cost the consumer €25, with the remainder borne by the French State. The notified scheme is expected to last two years and each consumer would be able to buy one card a year. The French government expects one million cards will be sold each year.

Under EU rules aid can be allowed if it furthers a general interest goal without unduly distorting competition.

The measure responds to concerns that the increasing volume of online music distributed in breach of copyright rules might drive legal music distribution platforms out of the market. It aims at developing the habit for consumers; when they are still young, to use legal music distribution channels over the Internet.

The measure requires website operators to contribute to the scheme through a reduction in the price of the music, an extension of the duration of the subscription and/or a contribution to the cost of advertising the card. It caps the benefit each operator may draw from the scheme at €5 million, with the purpose of ensuring that independent and niche operators are also able to benefit from the scheme. As a result, the scheme will contribute to preserving pluralism and cultural diversity in the online music industry.

The Commission therefore concluded that the benefits of the measure would outweigh any potential distortions of competition that might be brought about by the aid.

The non-confidential version of the decisions will be made available under the case number N97/2010in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.